For the third straight year with a credentialed chief financial officer on staff, Sumter School District had no surprises with the formal release of its official audit report.
Given its financial performance, the district will in likely by lifted …
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SUMTER SCHOOL DISTRICT AUDITS
YEARLY NET INCOME/NET LOSS
- Fiscal Year 2016: (-$4,376,374)
- Fiscal Year 2017: +$779,230
- Fiscal Year 2018: +$7,763,365
- Fiscal Year 2019: +$5,715,433
ENDING GENERAL FUND BALANCE BY YEAR
- Fiscal Year 2016: +$106,449
- Fiscal Year 2017: +$885,679
- Fiscal Year 2018: +$8,649,044
- Fiscal Year 2019: +$14,364,477
* Source: Harper, Poston and Moree, P.A., and Mauldin & Jenkins LLC
Given its financial performance, the district will in likely by lifted from a fiscal emergency declaration in the coming months.
Alan Grimsley, partner with Mauldin and Jenkins LLC, the district's outside auditor, reported Monday to the Sumter school board the district had a net change in fund balance of $5.7 million for the 2019 fiscal year, lifting its general fund to $14.3 million, effective June 30, 2019.
Those totals were in line with CFO Jennifer Miller's most recent projections to the board and is above one month's operational expenditures, which the district is required to have in its reserve fund by state law.
One month's operating expenses for the district for fiscal 2019 has been about $10.2 million.
However, to be more fiscally sound, the district needs to push the general fund higher, officials said.
Miller has referenced previously the one-month threshold is a "bare minimum," and she has proposed a more realistic figure for reserves would be 15% - which is about $18 million - to improve the district's bond rating.
Grimsley somewhat echoed her comments by saying the district needed to issue a tax anticipation note (TAN) this year to fund operations, given the fluctuating nature of property tax collections. When TANs are issued, districts are responsible to pay subsequent interest charges.
"If your fund balance was a little bit larger, you would not have the expense of having to issue a TAN to fund the operations until you get your property tax revenue later in the fiscal year," Grimsley said.
Miller said Wednesday to The Sumter Item that best practices for an adequate fund balance range from two to three months of general fund operating expenditures.
"A range of two to three months' reserves for the district would be approximately $20 million to $31 million," she said.
The audit by Mauldin and Jenkins also showed the district had no material weaknesses in internal controls.
The audit potentially puts to a close the district's financial troubles that were first discovered three years ago this month with the release of the fiscal 2016 audit report.
That report revealed the district overspent its budget by $6.2 million and had an ending reserve fund balance on June 30, 2016, of $106,449 - a critically low level, according to its previous auditor, Robin Poston. At the time, the district had operated for two years without a credentialed CFO.
Within a few weeks after the report, the district hired a financial consultant in January 2017 to guide the district through its financial difficulties. The district has operated with a full-time CFO in its annual budget since July 2017.
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